Pandemic positions some companies to do better than others
Share Now on:
Corporate performance in this economic crisis won’t be uniformly terrible. Twitter announced on Thursday it has seen a spike in daily active users. Food giant Kraft Heinz reported higher revenue in the first quarter. Comcast had a not-great earnings report but did benefit from a lot more people signing up for broadband. Turns out, there are business winners and losers in the new COVID-19 reality.
Increased demand for food staples means higher sales for companies like Kellogg’s, which Thursday reported stronger-than-expected earnings. John Stanton, professor of food marketing at Saint Joseph’s University, said people are stocking up on foods with long shelf lives, like Nutri-Grain Grapetastic breakfast bars.
“If you get panicky and you say, ‘Oh, I don’t know if I can get to the store that often. I’m going to buy more of these products,’ you’re much more likely to use them up,” Stanton said. “And when you go to the store, you buy them again.”
But, will we keep buying Pop-Tarts and Eggo waffles after the lockdowns are over? Nicholas Rossolillo, president and investment advisor at Concinnus Financial, thinks we might — at least for a while as people develop new buying habits and sales stay elevated.
“If you’re driving to the Grand Canyon, you have to go up the mountain first, and then you go back down the mountain. But you settle onto this high-elevation plateau,” Rossolillo said. “I think that’s what sales for a lot of these staples companies are going to do.”
It’s not just food companies. Amazon, Google, Microsoft and Netflix are also seeing some benefits from folks staying at home. Facebook said Wednesday its ad revenue has stabilized. And Daniel Ives, managing director and senior equity research analyst at Wedbush Securities, notes that on Thursday, Twitter reported growth in daily active users.
“They could be a net beneficiary, even though there’s definitely headwinds in their business,” Ives said.
Twitter may have more users, but the company also disclosed that ad revenue dropped 27% from March 11 to March 31 as the pandemic worsened.
COVID-19 Economy FAQs
Which businesses are allowed to reopen right now? And which businesses are actually doing so?
As a patchwork of states start to reopen, businesses that fall into a gray area are wondering when they can reopen. In many places, salons are still shuttered. Bars are mostly closed, too, although restaurants may be allowed to ramp up, depending on the state. “It’s kind of all over the place,” said Elizabeth Milito of the National Federation of Independent Business.
Will you be able to go on vacation this summer?
There’s no chance that this summer will be a normal season for vacations either in the U.S. or internationally. But that doesn’t mean a trip will be impossible. People will just have to be smart about it. That could mean vacations closer to home, especially with gas prices so low. Air travel will be possible this summer, even if it is a very different experience than usual.
When does the expanded COVID-19 unemployment insurance run out?
The CARES Act, passed by Congress and signed by President Donald Trump in March, authorized extra unemployment payments, increasing the amount of money, and broadening who qualifies. The increased unemployment benefits have an expiration date — an extra $600 per week the act authorized ends on July 31.
You can find answers to more questions here.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.
Thanks to our
Your support keeps us going strong, even through